Rockies

Cash prices advanced 8 cents on average Thursday as a winter storm that began in the West and Rockies marched through the Great Plains and into the Great Lakes. Only a few Northeast points showed declines.

Moody’s Investor Service on Wednesday said it was changing its outlook for Rockies Express Pipeline LLC (REX) from “stable” to “negative,” citing concerns over a possible decline in the natural gas pipeline company’s earnings in late 2014 and its long-term competitiveness.

The Federal Energy Regulatory Commission approved the requests of Wyoming Interstate Co. (WIC) Questar Overthrust Pipeline and Rockies Express Pipeline (REX) for temporary waivers of capacity-release regulations, clearing the way for the permanent release of off-system capacity held on WIC’s pipeline to certain shippers. The capacity-release transactions are a one-time basis only and have to be done within 90 days. WIC currently holds 200,000 Dth/d of off-system capacity on REX and has three transportation agreements for capacity on Questar Overthrust to provide shippers on its system seamless transportation service. A breakdown of the agreements held by WIC on Overthrust includes 365,000 Dth/d through 2017; 190,00 Dth/d from November 2018 to September 2020; and two contracts for 120,000 Dth/d and 40,000 Dth/d, both of which run through 2020, according to Overthrust’s waiver request. WIC is proposing to release permanently all or a portion of the reserve capacity that it holds on Overthrust. With respect to the capacity on Overthrust, WIC told FERC it has encountered unexpected nominations and scheduling issues that have affected the quality and reliability of service received by WIC shippers. After “actively collaborating” to resolve the issues, “WIC states both pipelines [it and Overthrust] have agreed that the ideal solution is to permanently release WIC’s Overthrust capacity to the respective shippers on whose behalf WIC acquired the off-system capacity.” Three shippers have expressed an interest in a permanent release of the Overthrust capacity: Occidental Energy Marketing Inc., Marathon Oil Co. and WPX Energy Inc, according to WIC [RP12-1018].”Two of these shippers, Occidental and Marathon, also rely on REX off-system capacity, which WIC acquired on their behalf.

Physical prices on average fell almost 4 cents Thursday as California locations along with the Rockies were especially hard hit. Some Northeast points managed to rise as constraints and curtailments limited flows.

The Permian Basin, as well as the Eagle Ford and Bakken shales, which today are considered the “big three” drivers of U.S. oil production, would remain economic at current costs if West Texas Intermediate (WTI) crude oil prices were to fall to $65/bbl, according to an analysis by Raymond James & Associates Inc. In fact, 13 of 20 onshore oil plays evaluated would breakeven below $65 using current costs, said analysts.

A recent legal settlement may have cast further uncertainty on a long-standing proposal for the Palomar natural gas pipeline to bring Rockies gas west of the Cascade Mountains into Pacific Northwest population centers.

A recent legal settlement may have cast further uncertainty on a long-standing proposal for the Palomar natural gas pipeline to bring Rockies gas west of the Cascade Mountains into Pacific Northwest population centers. Backers of the scaled-down 220-mile, 36-inch diameter line, say it is still alive but “on hold.” However, without new commercial commitments for the pipeline, at least one of the backers said the project won’t go forward.

Physical gas for weekend and Monday delivery was mostly flat in Friday’s trading with modest gains posted in the Rockies and Midcontinent. However, the real story could be found in the northeast, where large drops were recoreded for a second straight trading day.

Driven by natural gas liquids (NGL) production out of the Rockies and the Eagle Ford Shale of South Texas, Enterprise Products Partners LP plans to construct two more NGL fractionators at its Mont Belvieu, TX, facility. These would provide 150,000 b/d of incremental capacity.